11 May Managing the Chaos: What Makes Direct Sales Fulfillment Different
In the new frontier of omni-channel sales, fulfillment centers find as many opportunities as they do challenging obstacles. Direct sales, an industry that garnered an impressive 34.4 billion dollars in sales in 2014 according to the Direct Selling Association, is a growing demand that straddles that fence. Direct sales takes the brick-and-mortar requirement of a storefront off the table without removing it entirely, and hyper-focuses on customization and sales venue flexibility.
In direct sales, orders may arrive:
- Through online sales portals
- Through manual invoices
- Through hybrid invoices from individual representatives
- Through hybrid invoices from regional or company representatives
- Monthly, through auto-ship subscriptions
These orders may be fulfilled:
- By sending to the end customer directly, with nondescript packaging / invoicing
- By sending to the end customer directly, with customized packaging / invoicing
- Automatically to the end consumer through an auto-ship agreement
- Through sending individual or multi-item shipments to a representative to divide and personally deliver
- By sending to regional and/or company-level representatives to divide and deliver
The combinations of potential MLM ordering and shipping scenarios are nearly endless, which is why direct sales is such an unusual market segment in terms of fulfillment. To remain competitive in a market that is, according to DSA 2014 statistics, crowded with over 18 million representatives, an MLM-friendly fulfillment center has to rise to this challenge and offer flexible benefits to their direct sales clients. For example, while branded boxes, invoices and enclosures may be a minimal or limited concern to traditional retailers and e-tailers, branded packaging and custom handling is the bread and butter of an industry focused on constant in-the-moment style promotion for growth.
A Bigger Personal Stake
In a recent article for Direct Selling News, Kirk Anderson notes one of the biggest differences between an incorrect direct sales order over a traditional retail or e-tail order: “For many direct selling businesses, the value of the product doesn’t justify the cost of getting it returned, and wrongly shipped items are simply written off.” That means that high volumes of inaccuracies can be devastating to a growing direct sales business, leaving them an unenviable choice between alienating the customers they need to survive or taking the financial hit on “lost” product, an equally unpalatable financial outcome. Not only does the fulfillment center they partner with need to remain open and flexible in terms of omni-channel sales venues, they have to understand how important their place in that relatively unique supply chain truly is. While larger chain stores may, considering the sheer volume of their skus, write in some adjustment room for picking errors, most direct sales companies simply can’t afford to follow suit.
To put it another way: in direct sales, a great deal of effort is invested in educating and convincing individual buyers. By the time they get to some form of checkout process, the company is also very invested in them. Unlike retail sales, where a buyer passively interacts with a product that catches their eye and has their choice of sales venues, direct selling narrows the “I can shop around” protest to other representatives of the company, with the same price points. The decision to buy is made with more resolution than a typical “free range” sale, and a potential loyalty born the moment an MLM order is transmitted. It’s a proven process – hence the growth of the industry – but it’s also a delicate one that can’t afford disruptions made by inaccurate fulfillment. Botch the first order, and that customer isn’t just left cold by that product – their perception of the entire brand is spoiled and the chances of a repeat sale or converting that buyer to become a representative are very slight. Customer loyalty is everything when it comes to building and maintaining an MLM brand – just ask Mary Kay, one of the oldest and most successful MLM businesses with 1.7 million representatives, per DirectSalesAid.
The Auto-Ship Win
For MLM consumables, the auto-ship plan is a huge sales target, and often comprises the majority of orders. Locking in customers to a steady stream of product builds both convenience and loyalty in a brand – but only when those shipments are reliably sent out. An MLM-focused fulfillment center will be prepared for the rigors of automatic shipment demands, whether they’re weekly, monthly or further apart. When orders are batched through to a fulfillment center, a warehouse team can prepare for auto-ship bulk orders ahead of time. This expectation ensures that enough raw materials and actual skus are on hand to keep the process moving along smoothly – even when those profitable recurring orders climb into the thousands. Planning for success with auto-ship orders means handing off the reins to a trusted fulfillment partner: the larger your individual MLM venture becomes, the more vital an MLM product-focused warehouse is to success.
The “Do-It-All” Myth
Bootstrapping fulfillment practices are particularly common in the case of smaller, start-up direct sales companies. In the beginning, they may work, but if a company is aiming for success, they will inevitably outgrow their closet/dining room/storage unit operations and find out just how expensive if is to set up a fulfillment infrastructure from scratch. Partnering with a direct sales-friendly fulfillment provider eliminates the need to find and rent a facility, hire specialized staff, install shelving, bins and inventory equipment, wire order processing equipment, install security, obtain insurance, contract with third party logistics providers, and so on. If a brand is hoping to obtain venture capital or secure a loan for future growth, an established fulfillment partner removes a lot of concerns from the consideration list as well. Outsourcing fulfillment is important for your customer service needs as well; Jamie Salvatori points out in Practical ECommerce that “Fulfillment is probably the most important aspect of a … business because it’s the LAST thing customers remember about their interaction with your store.” As recruitment is one of the most important aspects to MLM brand growth, start-up kits and refills for established kits need to be available as well, ideally in customized arrangements to extend the capabilities of representative onboarding. With very little effort, a stable fulfillment partner can provide advanced kitting assistance, including certain brochures, CDs or other inclusions based on the representative slated to receive the kit. With this added “wiggle room” outside of the one-size-fits-all concept, MLM companies can capture new demographics and markets with ease.
If you’d like to discuss the fulfillment and distribution needs of your direct sales brand, Ottawa Logistics is ready to offer customized solutions that fit your budget and exceed your expectations. We’re committed to helping you grow your MLM company with superior service and delivery – discover what our direct sales fulfillment expertise can do for you by contacting us today for a customized quote.